IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: AMERICAN INVESTORS :

LIFE INSURANCE CO. ANNUITY : MDL DOCKET NO. 1712

MARKETING AND SALES PRACTICES :

LITIGATION :

 MEMORANDUM

McLaughlin, J. September 16, 2011

The defendants, AmerUs Group Company, AmerUs Annuity 1

Group Company, American Investors Life Insurance Company, AmerUs

Life Insurance Company, Creative Marketing International 2

Corporation, and Insurance Agency Marketing Services, Inc., move

the Court to enforce its final order and judgment against Orlis

M. Charboneau (“Charboneau”), executor of the estate of class

member Paul Eugene Charboneau. The defendants’ motion seeks an

injunction barring Charboneau from litigating a civil action

against Aviva USA Corporation in the District Court for the

Thirteenth Judicial District, Civil Department, Butler County,

Kansas, styled Orlis M. Charboneau ex rel. Estate of Paul Eugene

Charboneau v. Aviva USA Corporation, No. 11-79 (“Kansas Action”). 

The Court will deny the defendants’ motion.

 AmerUs Group Company is now known as Aviva USA 1

Corporation.

 AmerUs Life Insurance Company is now known as Aviva Life 2

and Annuity Company.

Case 2:05-md-01712-MAM Document 538 Filed 09/16/11 Page 1 of 13
I. Facts

The final order and judgment at issue in the

defendants’ motion relates to a multidistrict litigation

proceeding that consolidated six putative class action lawsuits. 

The plaintiff class alleged that the defendants misrepresented

the characteristics of complex, long-term deferred annuities

and targeted their sale to class members despite their lack of

liquidity. In re Am. Investors Life Ins. Co. Annuity Mktg. &

Sales Practices Litig. (In re Am. Investors), 263 F.R.D. 226,

228-30 (E.D. Pa. 2009).

The plaintiffs filed an unopposed motion on July 16,

2009 for preliminary approval of a class-wide settlement, class

certification, and an order directing an issuance of notice to

the class, to which they attached a proposed form of class notice

and the parties’ Stipulation of Settlement (“settlement

stipulation”). The Court preliminarily approved the notice and

settlement on July 28, 2009. Id. at 229. The settlement

stipulation provided for a broad release of claims relating to

the transactions that were the subject of the class complaint.3

 The settlement stipulation defines “Released Transactions” 3

to include:

(a) the design, development, marketing,

offer, solicitation, application,

underwriting, acceptance, issuance, sale

(including, without limitation, in connection

with the issuance of a Company Annuity as a

replacement for a non-Company annuity or

another Company Annuity), presentation,

2

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Following a fairness hearing on the proposed class

settlement during which counsel for both the plaintiffs and the

defendants appeared and spoke on behalf of their clients, the

Court certified the class and approved the settlement as

compliant with the United States Constitution and Rule 23 of the

Federal Rules of Civil Procedure on December 18, 2009. Id. at

234. The Court’s final order and judgment incorporated the

release and waiver included in the settlement stipulation. The

release in the settlement stipulation read, in relevant part:

illustration, projection, purchase,

operation, performance, interest crediting,

charges, administration, servicing,

retention, and/or replacement (by means of

surrender, partial surrender, loans

respecting, withdrawal and/or termination of

any annuity) of or in connection with (1) the

Contracts or (2) any annuity sold or to be

sold or offered in connection with, or

relating in any way directly or indirectly to

the sale or solicitation of, the Contracts,

or external or internal replacements of

annuities issued by the Companies, (b) the

marketing, sale, delivery, and/or performance

of any products, plans, or services in

connection with, or relating to or allegedly

relating to, the marketing, purchase, or sale

of a Contract, and (c) any and all matters

concerning or relating to this Settlement

(including, without limitation, the award,

election, and/or implementation of any

Settlement Relief with respect to a Contract).

Settlement Stip. X.A.2, Attach. 1 to Pls.’ Unopposed Mot. for

Prelim. Approval of Settlement, Certif. Of Settlement Class, and

Order Directing Issuance of Notice to the Class. The definition

was incorporated into the Court’s final order and judgment. In

re Am. Investors, 263 F.R.D. at 247-48.

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1. . . . [t]he Named Plaintiffs and all Class

Members, on behalf of themselves, their

heirs, assigns, executors, administrators,

predecessors, and successors, and any other

person or entity purporting to claim on their

behalf, hereby expressly and generally

release and discharge the Releasees from any

and all causes of action, . . . whether such

claims are based on federal, state, or local

law, statute, ordinance, or regulation . . .,

contract, common law, or any other source,

relating to any Company Annuities and that

were or could have been asserted against

Defendants in the Complaint or any other

complaint encompassed in the Action, or that

could have been asserted against Defendants

. . . , or relating in any way to the

Released Transactions. . . .

3. Nothing in this Release shall be deemed

to alter the contractual rights and benefits

of a Named Plaintiff or any other Class

Member for the express written benefits that

are due or will become due in the future

pursuant to the express written terms of a

Contract, except to the extent that such

rights are altered or affected by the award,

election, and/or implementation of Settlement

Relief under this Agreement.

Settlement Stip. X.B. The Court entered a permanent injunction

barring class members from filing, commencing, prosecuting, and

maintaining any lawsuit relitigating the causes of action, or

facts and circumstances related to the cause of action. The

Court also retained jurisdiction for, among other things, all

matters relating to the enforcement and interpretation of the

settlement stipulation and final order and judgment. In re Am.

Investors, 263 F.R.D. at 250-52.

The class is defined as “[a]ll persons and entities

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that purchased Company Annuities issued during the Class Period

[from January 1, 1998, up to and including July 28, 2009] and all

persons and entities to which an ownership interest in such

Company Annuities was subsequently assigned or transferred, or

that otherwise held any interest as an Owner in Such Company

Annuities, during the Class Period.” Id. at 230-31. 

Charboneau’s Petition in the Kansas Action (“Charboneau

Pet.”), attached to the defendants’ motion as an exhibit, seeks

payment of the cash surrender value of Paul Charboneau’s annuity

contract with Aviva USA. The Petition alleges that Paul

Charboneau and his wife, Carrie Charboneau, entered into an

annuity contract with American Investors Life Insurance Company,

Inc. on September 23, 2006; the contract provided that it could

be surrendered during the lifetime of either annuitant for a Cash

Surrender Value. Charboneau Pet. ¶¶ 5, 9. The parties do not

dispute that Paul Charboneau was a member of the settlement

class, and that Orlis Charboneau, as executor of his estate, is

thus bound by the terms of the Release to the extent they apply

to his claims.

Charboneau asserts that on October 10, 2007, Avis A.

Deck, acting under power of attorney for Paul Charboneau,

contacted Aviva USA to surrender the annuity contract and request

payment of the proceeds of the contract to Paul Charboneau. 

Charboneau alleges that Aviva USA received notice of the request

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by October 11, 2007 and was thus aware of its obligation to remit

the cash surrender value of the contract. Instead, upon learning

of the deaths of Carrie Charboneau (which occurred on August 25,

2007) and Paul Charboneau (which occurred on October 12, 2007),

Aviva USA paid a death benefit to the named beneficiary on the

contract on February 14, 2008. Charboneau Pet. ¶¶ 12-19.

Charboneau asserts that upon Aviva USA’s receipt of Ms.

Deck’s letter, Paul Charboneau was entitled to benefits due under

the annuity contract, i.e., the cash surrender value, and that

that right passed to his estate upon his death. The Kansas

Action asserts that the payment of death benefits to the named

beneficiary in lieu of paying the cash surrender value to Paul

Charboneau’s estate is a breach of the annuity contract. Id.; id.

¶ 20.

II. Analysis

The motion presents two related questions: (a) whether

the conduct alleged in Charboneau’s Kansas Action for breach of

contract falls within the settlement stipulation’s definition of

“Released Transactions,”; and (b) if so, whether Charboneau’s

claim in the Kansas Action is exempted by Section X.B.3 of the

settlement stipulation (“exemption”). The Court answers both

questions in the affirmative. 

The settlement stipulation defines “Released

Transactions” to include, among other things, claims relating to

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the “operation,” “performance,” “administration,” or “servicing”

of annuity contracts at issue in the multidistrict litigation. 

Paul Charboneau entered into his annuity contract with American

Investors Life Insurance Company within the class period in

September 2006, and his estate’s claim for breach of that annuity

contract otherwise relates to the “performance” or

“administration” of that contract according to his terms. The

settlement stipulation, as incorporated into the court’s final

order and judgment of December 18, 2009, permanently “bar[s] and

enjoin[s]” class members from “filing, commencing, prosecuting,

maintaining . . . any lawsuit . . . based on or relating to the

Released Transactions.” In re Am. Investors, 263 F.R.D. at 250.

Charboneau asserts that the allegations in the Kansas

Action have “nothing to do with” those of the class in the

multidistrict litigation because he does not challenge the way in

which the annuity contract was sold to Paul and Carrie Charboneau

or its suitability as an investment. Resp. of Orlis Charboneau

to Defs’. Mot. to Enforce Order and Judgment (“Charboneau Resp.”)

at 2. Although the malfeasance alleged in the Kansas Action is

not identical to that originally alleged by the class prior to

settlement, it does relate to the performance of an annuity

contract, that is, the failure to pay surrender value according

to its terms. 

The Third Circuit follows other circuits in its policy

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favoring “comprehensive settlements.” In re Prudential Ins. Co.

Of Am. Sales Practices Litig., 261 F.3d 355, 366 (3d Cir. 2001)

(internal quotations omitted); see also Berardinelli v. Gen. Am.

Life Ins. Co., 357 F.3d 800, 805 (8th Cir. 2004) (“There is no

impropriety in including in a settlement a description of claims

that is somewhat broader than those that have been specifically

pleaded.”). The Court accordingly approved a settlement that

encompassed claims beyond those asserted by the class, and the

notice mailed to class members prior to the Court’s approval of

the settlement thus provided: “Plaintiffs understand and agree

that this Release is, and is intended to be, a broad, general

release of the Releasees” of past, present, and future claims

within its scope. In re Am. Investors, 263 F.R.D. at 249. 

Indeed, class members released the defendants from claims that

“were or could have been asserted” in the class complaint and

from claims “based on or related to the facts alleged in the

Complaint . . . or relating in any way to the Released

Transactions.” Id. at 248. 

The Court concludes that Charboneau’s claims in the

Kansas Action do relate in some way to the Released Transactions. 

The parties do not dispute that Charboneau’s estate received

notice of the settlement and did not elect to opt out of the

class certified for settlement. Thus, in the absence of any

other provision exempting his claim from the scope of the Court’s

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injunction, Charboneau would be barred from continuing with the

Kansas Action. The Court turns to the exemption in Section X.B.3

of the settlement stipulation.

Section X.B.3 provides that claims “for express written

benefits that are due . . . under the express written terms of a

Contract” will not be barred by the terms of the Release. The

defendants argue that this clause “simply refers to the

settlement not altering contractual rights except to the extent

provided in the settlement; it does not create an exception to

either the definition of ‘Released Transactions’ or the Court’s

permanent injunction.” Defs.’ Mem. at 15 n.4. They argue that

the effect of the clause is to make clear that “[c]lass members’

post-settlement claims, and other claims truly outside the

Release, are not barred.” Defs’. Reply at 4 (emphasis in

original). Such a reading effectively renders Section X.B.3

superfluous; it would require the Court to find that the

exemption states that contractual rights are not altered except

to the extent they are altered. 

The defendants argue that this and other district

courts have found language in similarly broad releases to bar

later actions under similar circumstances. The cases cited by 4

 The Court held that another class member’s state court 4

action was barred under the terms of the injunction in this case,

despite that plaintiff’s argument that the timing of the

appointment of his conservator prevented him from electing to opt

out of the settlement. See In re Am. Investors Life Ins. Co.

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the defendants in support of their motion are distinguishable

because neither of those cases involves the assertion of a claim

as directly exempted by the terms of a release as here.

The defendants cite Greene v. Metropolitan Insurance

and Annuity Company, No. 07-2903, 2009 WL 1045016 (D.N.J. Apr.

20, 2009), where the court found that misrepresentations on an

insurance contract alleged by the plaintiff constituted a

“Released Transaction” within the terms of the settlement in that

case. The plaintiff argued that his action was not barred

because he did not allege the same type of misrepresentations as

in the settled case, and that his claim arose after the period

covered by the settlement. The court rejected both arguments,

finding that the alleged misrepresentations happened when his

policy was marketed or sold and were sufficiently similar to

those in the class complaint. Greene, 2009 WL 1045016, at *8-9. 

In addition, Green argued that his claim fell within an exemption

for certain “claim[s] for any benefits . . . payable under the

express terms of the policies.” Id. at *9 (internal quotations

omitted). The court barred the plaintiff’s action because it

found that the complaint had alleged the same kind of policy

cancellation malfeasance at issue in the settled case and was

Annuity Mktg. & Sales Practices Litig., 715 F. Supp. 2d 610 (E.D.

Pa. 2010). 

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thus a “Released Transaction.”5

Greene is inapposite. Mr. Greene’s claim was one

alleging misrepresentations as to the character of his insurance

policy and the nature of premium adjustments in the future. In

contrast, Charboneau’s claim in the Kansas Action is plainly one

for benefits he alleges are owed to the estate under the annuity

contract. The Greene court found that the plaintiff did not seek

benefits due under the express written terms of his policy, as

Charboneau seeks in his Kansas Action.

The defendants similarly cite Ross v. Metropolitan Life

Insurance Company, 411 F. Supp. 2d 571 (W.D. Pa. 2006), in

support of their motion. The Ross court barred another In re

MetLife class member from asserting his claim in state court

because it was covered by the MDL settlement. The court rejected

Ross’ argument that a provision in the release relating to

“unknown claims” permitted him to pursue an action in state court 6

because he was unaware of the alleged misrepresentation until

after the class settlement was finalized, and directed Ross to

 The final order and judgment at issue in Greene is In re 5

Met. Life Ins. Co. Sales Practices Litig., No. MDL 1091, 1999 WL

33957871 (W.D. Pa. Dec. 28, 1999) (“In re MetLife”).

 The “unknown claim” exception provided that the release 6

would not “prevent a Class Member from submitting a claim [to the

settlement’s claim-processing body] . . . so long as the Class

Member did not discover the facts forming the basis of the

claim—and could not, with reasonable care, have discovered

them—before [the deadline set in the agreement].” Ross, 411 F.

Supp. 2d at 578.

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seek relief through the methods established in the settlement

agreement. Ross, 411 F. Supp. 2d at 575-79. 

Like the Greene plaintiff and unlike Charboneau, Ross

did not seek benefits under the express written terms of his

policy. Further, the defendants argue by analogy to Ross that

Section X.B.3 merely directs class members to pursue their

“preserved” contract remedies through the processes established

in the settlement stipulation. See Defs.’ Mem. at 15 n.4. The

Court is unconvinced. No analogous comprehensive claimsprocessing body was established by the Court in its final order

and judgment through which Charboneau would be able to vitiate

his claims. See In re Am. Investors, 263 F.R.D. at 231

(describing the limited role of the “claim process relief”

option). Moreover, unlike the parties in Ross, neither

Charboneau nor the defendants argues that the processes

established by the Court are a suitable forum for the resolution

of the estate’s claims. See Ross, 411 F. Supp. 2d at 579 n.4. 

The Court finds that the Kansas Action is a claim for

express written benefits under the annuity contract entered into

by the defendants with Paul and Carrie Charboneau. Section X.B.3

exempts such claims from the otherwise broad release of claims in

the settlement stipulation incorporated into the Court’s final

order and judgment on December 18, 2009. Thus, Charboneau’s

state court action is not barred and the Court will not exercise

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its power, pursuant to its retention of jurisdiction, to enjoin

him from proceeding.

A separate order follows. 

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